Mass Default on personal debt will bring about immediate and total freedom from debt for the individual and is an effective form of protest against the banks and the government for the millions of discontented people who wish to see real change to the way the world functions.

Continuing to repay debt validates the current neo-liberal orthodoxy and only serves to keep it in place. The financiers and the financial system that serves them so well are dependent on the belief that people will repay what they borrow. But what if this were to change…

Much of the personal debt foisted on people during the easy credit years was a hostile act on the part of the banks and is odious debt. There is no moral obligation to repay this debt.

People should be free and able to live their lives without having their brief time on this planet ruined by those who chase profit for their own personal gain and at the expense of other people’s happiness.

There is no shame to being in debt as the system is set up for you to be carrying enormous liabilities and its survival is dependent on your indebtedness to keep feeding shareholder profits and bankers’ pay packets.

There is no stigma in defaulting. Default should be a purely economic decision, or one based solely on your desire to live; emotions or outdated ethical positions should not come into it and certainly not while the system is so weighted against the individual.

Default is a necessary act, both for personal freedom and as an act of rebellion against the dominance and power of the financial institutions. Mass default will liberate the individual at the same time as undermining the power of the banks.

I have lived through the dark days of debt and know how a life can be blighted by this scourge of our age. I have also come out the other side by taking the decision to default. I am free from debt and each day I reap the rewards of a life unfettered.

Yet I see a world where millions of debtors remained enslaved to banks who have been bailed-out and have returned to ‘bonuses as usual’, a world of unfairness where the people at the bottom bear the brunt of savage cuts while those at the top suffer no hardship and continue to gain assistance from governments to further increase their wealth.

I do not propose Mass Default from an obscure philosophical position – I promote such action based on very real, first-hand experience. Life without debt is a life worth living. A debt free life can be yours if you want it.

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The mountain of personal debt which many people are struggling to repay was leant by banks in the rapacious pursuit of profit, a hostile act that was not in the personal interest of borrowers – it is therefore ‘odious debt’ and should not be repaid.

Why am I in Debt?

Have you ever sat down and looked at your debt liability only to feel that somehow you’ve been played, duped or conned? Sure, you take responsibility for taking out all those cards and loans, after all, nobody was holding a gun to your head as you signed the agreements, but still, you can’t help feeling that it’s all a set-up. There’s something about it that stinks.

Why is it that you were lent so much money with few or no questions asked? Why didn’t the bank run a cross-check with other lenders to see how much existing debt you were already carrying? Yes, something’s not quite right. And if it feels a little like somebody maybe wanted you to be in debt then that’s because this is exactly the crux of the personal debt crisis and the reason why so many people are saddled with crippling liabilities: banks wanted people to have all their cards and loans because it meant big profits for them – they didn’t care whether it was going to be damaging for you or not.

And now you’re buckling under the weight of repayment. You’re looking at years of hard graft and are struggling to see the light at the end of tunnel. Well, there is an answer. As the world wakes up to the fact that the system is rigged in favour of the few, the legions of debtors in thrall to the power of the banks can, with a little smart thinking, extricate themselves from their trap by taking a cue from nation states who have successfully used the concept of odious debt to declare national debts unenforceable and as a justification for defaulting.

What is Odious Debt?

The term ‘odious debt’ is a fantastic phrase, evoking a sense that there is something rotten about a particular debt, that this debt stinks! But what exactly is odious debt?

“In international law, odious debt is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.”

The founding father of the odious debt principle was Alexander Sack, a lawyer in post-revolutionary Russia. In seeking to distinguish between debts incurred for the benefit of a nation and debts incurred by a regime for self-serving purposes, Sack also considered the role of the lenders, believing that creditors who lent to regimes in the knowledge that the money would be used for ends which were contrary to the interests of the nation had actually committed a hostile act (with regard to the people) and consequently could not expect a nation freed from that regime to assume liability for these debts.

From Macro to Micro – how is my personal debt odious debt?

It is Sack’s identification of the lender’s role and recognition of their awareness that they were lending money in an unethical manner, purely in the pursuit of profit and without caring for the purposes to which the money was being put to, that is transferrable to the current personal debt crisis and consideration on the part of individuals in deciding to default.

Creditors who lent to people in the knowledge that the money being lent was contrary to the interest of the individual, as occurred with the predatory lending practices of the banks during the easy credit era, have created an odious debt at the micro level and this can be used as an ethical justification for defaulting on personal debt.

Consider the fact that pre-credit crunch, the banks were actively targeting people who they knew would never be able to fully repay their debts as these people made for the most profitable customers. If foisting credit upon Bill & Nora Poorfucker living on a council estate and working part-time in the local charity shop is not a hostile act on the part of the lender then it’s difficult to imagine what is. Also, the banks were so aggressive in their marketing and promotion of credit (think constant mailshots and credit card cheques landing on the doormat every other day) and didn’t care two hoots what people they lent to would actually do with money or what they wanted it for – just the type of practices that can be considered contrary to the interests of the individual.

When we consider the nature of the money lent during the credit boom – particularly why and how it was lent – a strong case can be made for justifying default (on personal debt) on an odious debt principle.

As New York cracks down hard on the Occupy Wall Street protesters in Zuccotti Park and the Corporation of London serve notice on the London branch of the Occupy movement at St. Paul’s, Occupy LSX has performed a smart counterattack by taking over a vacant UBS building in the city.

This is a clever move by Occupy LSX, sending a message to politicians and the masters of global finance that this movement has legs and won’t be easily crushed: the level of discontent runs too deep.

If the government and the city authorities are embarrassed by the presence of protestors on the steps of St. Paul’s and Finsbury Square, they will now be regretting ever trying to evict them; hitting the protestors with a hammer will only create smaller, more widely dispersed fragments that will be harder to clean up.

You can read details of this ‘public repossession’ on the Bank of Ideas website as well as finding details of upcoming events.

It’s almost time to close the piss-takers parade that is the ‘Bankruptcy Heroes’ poll and announce a winner. However, the audacious debt-dodging deeds of regular punters Phillip Hoare & Leigh Cooke, have put them way out in front of the chasing pack and this pair are currently neck-and-neck with 21% of the vote each!

An outright winner is needed so I can track them down to present them with their award: a copy of The Bankruptcy Diaries and an interview slot on this blog.

So, please cast your votes and decide who should enter the Bankruptcy Hall of Fame – should it be the ex-copper with many vices, or the smash ‘n’ grab chancer?

The levels of personal debt incurred by young people today are creating a generation of people locked out of acquiring property and other assets that previous generations have enjoyed, according to a recent CCCS report ‘Debt and the Generations’.

Young people are increasingly concerned about their debt problems

The report states that consumers are now ‘acquiring large levels of debt, especially unsecured debt, much younger’ and, that, ‘due to rising house prices and reducing incomes it seems unlikely that younger households will be able to acquire assets in the same way their parents and grandparents did.’

The report also identifies the impact of rising student loan debt on the ability of young people to acquire wealth. And it is no surprise to read in the report that those who cannot count on help from ‘the bank of mum and dad’ (or mummy and daddy), will be more affected by debt, thereby exacerbating existing inequalities.

Economics for the Debt Generation

Faced with such a bleak future and a system that is so weighted against them, young debtors need to take a step back and think purely in terms of self-interest and look at the cold, hard economics of the situation: would it be more financially advantageous to default on their debts and have them written off and then begin the process of saving?

It's all about freedom

It would be fairly easy to sit down and work out how long it would take to pay off existing debts, as well as calculating how little could be saved during the years of debt repayments, then compare this to the amount that could be saved during the same period if there were no debts to pay. Without debts to pay it is highly likely that if an individual were so inclined, that by the time their debts would have been paid off that they could have saved enough money for a large deposit on a house. Of course, if you default then your credit rating will be bad for 6 years but it is likely to take debtors far longer than 6 years to repay their debts, so for most debtors, default will still make sound economic sense.

Above all, it is simply a financial decision, the type that big banks and financial institutions perform daily and without emotion or moral considerations clouding their judgement.

It is important to remember that not everyone is obsessed with getting on the property ladder but the same logic applies to young debtors who just want to live.

The essential question that every debtor should be asking themselves

One thing to investigate when considering default is the prospect of post-insolvency restrictions such as Income Payment Orders, but these can be avoided, principally if you happen to be unemployed at the time of your insolvency. This was how it turned out for me and is something I explained in my book. However, while I could have used the last few years to save, I preferred to invest in myself and work fewer hours in order to pursue creative projects. Whatever your goal, the question of debt always boils down to the same question: would default enable me to achieve what I want quicker than repaying my debts? This is the essential question that every debtor should be asking themselves.

• Increasingly first time buyers (FTBs) can only get onto the housing ladder with help from the ‘bank of mum and dad’ – 45% of all FTBs in 2010 received financial assistance, compared to 20% in 2005. For FTBs under 30, 84% require financial assistance in order to buy. This is leading to the exclusion of poorer young households from the housing market and perpetuating existing disparities in wealth within generations.

• The decade in the run up to the financial crisis saw a huge transfer of wealth from younger home buyers to older generations through the mechanism of rising property prices, and taken together the over 60s now own nearly half of all net assets in the UK. In contrast the under 30s own just 5%.

• Student loans will also impact on the ability of younger households to acquire wealth. Total student debt outstanding is expected to grow to £153 billion in real terms by 2031, with loan repayments amounting to nearly £7 billion a year. With student loan repayments reducing available income, future generations will find it difficult to save or invest in pensions until they are older, which will impact considerably on their quality of life when they reach retirement age.

Today’s press is full of reports of Britain’s return to borrowing on credit cards and personal loans, however, unlike the orgy of spending during the pre-crisis years this recent spike in unsecured borrowing is a result of people being unable to pay for essentials – what is known as ‘stressed borrowing’. Some of the key facts are:

• Borrowing on cards & loans has been increasing over the last 7 months as households struggle to make ends meet.

• There was an increase in borrowing on cards & loans of £629m in September compared to the August increase of £478m. The total figure for individual borrowing now stands at nearly £1.5 trillion.

• Borrowing on cards & loans is increasing at double the rate of mortgage lending, suggesting that people are turning to credit to get through the month. This is backed up by research from Shelter

Stressed borrowing = desperation

I myself am no stranger to stressed borrowing, having overspent on cards and loans and then finding myself in the dreadful position where I had to resort to credit card borrowing to get through the month. This awful vicious circle – involving endless anxiety, sleepless nights and stress – where debt spirals out of control, inevitably leads to a full blown debt crisis and is something I documented in my book. Whatever the cause of your stressed borrowing it is essential to face up to the reality of the situation: borrowing on cards and loans to pay for essentials and get through the month is a sign that things are out of control and you are only compounding your situation by continuing to borrow.

What to do?

If you are borrowing to get through the month then clearly you have a problem and need to do something about it – your situation will not improve if you fail to confront it and do nothing. Be decisive; today is the day you are going to regain control of your life.

Can you negotiate a move favourable repayment plan with your creditors? Is this even a realistic proposition? Perhaps you are a mini-Greece and no amount of restructuring is going to help, as you would simply be delaying the inevitable and enduring miserable living conditions in the process. So investigate different forms of insolvency: Debt Relief Orders, IVA’s or Bankruptcy.

Whatever your situation, it is vital that you DO SOMETHING ABOUT IT! Your life will not improve until you do. The best thing I ever did was confront my problem and take a decision. Think about how good it is going to feel when you do hit on a solution and think about how you’ll feel on that day when you are finally debt free…

The number of asset-less debtors going bankrupt has reached such levels that the cost of processing these bankruptcies is becoming unsustainable for the Insolvency Service, according to Stephen Speed, chief executive and inspector general of the Insolvency Service, who was speaking at the recent Insolvency Today annual conference.

While this news of asset-less debtors using our easy bankruptcy laws to start afresh is encouraging, Speed also said that a point had almost been reached whereby taxpayer money would be required to cover the shortfall of the processing costs, which, according to reports, seems likely given that the Insolvency Service was forced to write of £81 million earlier this year.

Try the Banks

No, you're not having any of it back

Following the great taxpayer robbery of the banking bailouts – where free-market profit-chasers brought the world to its knees with their financial jiggery-pokery and eye-watering bonuses and then went cap in hand to the state when it all blew up – the idea of more taxpayer money being required to plug a hole, this time to cover the mistakes of individual borrowers, will no doubt result in more opprobrium being directed at debtors by the more pious sectors of society. Yet, and now stop me if this sounds ridiculous, surely it would be better to assess each individual’s case and try to determine whether the lenders had been at all culpable and had irresponsibly lent to people they knew would have little chance of paying the money back?

Making the banks pay for their mistakes and their greed – what a ridiculous notion.

To anyone who is maybe worried about their bankruptcy appearing in the newspaper, here I am talking about it in my home town newspaper. However, despite the publicity I am still a long way behind Kerry Katona.